OPEChttp://www.businessinsider.com/category/opec
en-usTue, 26 Sep 2017 17:58:48 -0400Tue, 26 Sep 2017 17:58:48 -0400The latest news on OPEC from Business Insiderhttp://static3.businessinsider.com/assets/images/bilogo-250x36-wide-rev.pngBusiness Insiderhttp://www.businessinsider.com
http://www.businessinsider.com/oil-prices-hit-highest-point-two-years-2017-9Oil prices hit 2-year high as Turkey threatens to cut off Iraq's exportshttp://www.businessinsider.com/oil-prices-hit-highest-point-two-years-2017-9
Tue, 26 Sep 2017 04:17:54 -0400Camilla Hodgson
<p><img style="float:right;" src="http://static6.businessinsider.com/image/59561dc4bb350304d60a0697-800/oil-prices-rise-as-market-expects-extended-production-cut-2017-5.jpg" alt="FILE PHOTO - A worker at an oil field owned by Bashneft, Bashkortostan, Russia, in this January 28, 2015 file photo. REUTERS/Sergei Karpukhin/Files" data-mce-source="Thomson Reuters" data-mce-caption="File photo of a worker walking past a pump jack on an oil field owned by Bashneft, Bashkortostan"></p><p>LONDON — Oil prices jumped to their highest point in more than two years late on Monday and remain close to those levels in early trade on Tuesday.</p>
<p>The rise is down to international tensions between Turkey and Iraq, and increased demand from Asia.</p>
<p>Brent reached a high-point of $59.02 per barrel on Monday evening, its highest since July 2015, while US West Texas benchmark hit $52.22 per barrel.</p>
<p>Mike van Dulken, an analyst at Accendo Markets, says in an email on Tuesday morning: "Brent Crude traded a 27-month high overnight as the Kurdish referendum stokes supply concerns, while strong demand from China also aids sentiment."</p>
<p>On Monday, Turkey's President Recep Tayyip Erdogan threatened to disrupt oil flows from Iraq's Kurdistan region, in an attempt to pressure the area over its independence referendum, which he opposes. <a href="https://www.reuters.com/article/us-mideast-crisis-kurds-referendum-turke/we-have-the-tap-turkeys-erdogan-threatens-oil-flow-from-iraqs-kurdish-area-idUSKCN1C018V">Erdogan said</a> he could cut off the pipeline that carries hundreds of thousands of barrels of oil per day out of Iraq.</p>
<p>Hussein Sayed, Chief Market Strategist at FXTM, says in an email on Tuesday morning: "The Kurdistan region of Iraq currently produces around 650,000 barrels per day, of which 85% goes through the Turkish pipelines. If the Turks decided to cut crude flows, it would create a shock which markets are currently pricing in.</p>
<p>"However, I think this is going to be only a temporary threat, given that independence will not happen overnight and OPEC members will quickly cover the shortage. In my opinion, the spread between Brent and WTI has gone too far and should shrink back towards $4-5."</p>
<p>Brent is indeed retreating slightly on Tuesday morning but is still close to those two-year highs. Here's how Brent looks at 9.10 a.m. BST (4.10 a.m. ET):<img src="http://static6.businessinsider.com/image/59ca0d4c24884969760a8f66-764/brent.jpg" alt="brent" data-mce-source="Markets Insider" data-link="http://markets.businessinsider.com/commodities/oil-price"></p>
<p>As well as the Turkey-Iraq spat, growing demand from China and longer-term production cuts aimed at curbing the supply glut are also supporting oil's price rises.</p>
<p>OPEC countries, which include oil giants Saudi Arabia and the United Arab Emirates, have cut production by about 517,000 barrels a day since the beginning of the year, while other oil-producing nations like Russia have also made cuts. Since June, the price of Brent has risen by almost a third.</p>
<p>Although oil prices have been volatile over the past several years, BP's top oil trader in Asia, Janet Kong, told a Financial Times conference the market was now "at a juncture."</p>
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Thu, 21 Sep 2017 19:35:00 -0400Nick Cunningham
<p><img style="float:right;" src="http://static2.businessinsider.com/image/59c3d4db9803c51d008b8750-2400/rtstyv8.jpg" alt="Jabar Ali al-Luaibi" data-mce-source="Heinz-Peter Bader/Reuters" data-mce-caption="Iraq's Oil Minister Jabar Ali al-Luaibi talks to journalists during a meeting of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna, Austria, November 30, 2016." /></p><p><span>OPEC could extend its production cuts through the end of 2018 in an effort to rebalance the market, according to comments from Iraq&rsquo;s oil minister.</span></p>
<p><span>A few OPEC members even want the cuts to be deepened, Iraqi Oil Minister Jabbar al-Luaibi&nbsp;<a href="https://www.bloomberg.com/news/articles/2017-09-19/iraq-backs-additional-1-cut-in-oil-output-with-others-in-opec">said</a>&nbsp;at an oil conference in the UAE. &ldquo;Some think that cuts should be extended beyond March, three or four months, or six months, or maybe till the end of 2018,&rdquo; al-Luaibi said. &ldquo;Some, like Ecuador and other countries, even Iraq, think there should be another cut of 1 percent.&rdquo;</span></p>
<p><span>OPEC officials have time and again hinted at possible actions as a way of influencing market sentiment. Often, the jawboning works, at least temporarily. Sometimes it can backfire if it raises expectations too much.</span></p>
<p><span>The latest iteration of this game of market psychology came a few weeks ago when top OPEC officials suggested they were&nbsp;<a href="http://oilprice.com/Energy/Oil-Prices/Expect-An-Extension-Of-The-OPEC-Deal.html">considering a three-month extension</a>, pushing the deal out through June 2018. It wasn&rsquo;t exactly an overwhelming show of force, and oil prices didn&rsquo;t move all that much on the rumors.</span></p>
<p><span>Most oil analysts are of the view that the OPEC cuts are working, but only if they remain in place. There is no shortage of projections from investment banks, energy watchers, and government forecasters that see oil prices crashing if OPEC abandons the cuts at the end of the deal in March 2018. That is why OPEC officials are laying the groundwork for a possible extension.</span></p>
<p><span>But the comments from Iraq&rsquo;s oil minister are more significant, for a few reasons.</span></p>
<p><span>First, and most obvious, is that he says the group is considering much longer cuts. Extending the output limitations through 2018 would go a long way to reassuring the market that a return to full production is off the table for now.</span></p>
<p><span>Second, he hinted at deeper reductions. That would be a heavier lift for OPEC and the non-OPEC participants and there would certainly be some countries resistant to such an outcome. A few months ago Ecuador&nbsp;<a href="http://oilprice.com/Energy/Crude-Oil/Ecuador-Abandons-The-OPEC-Deal-Whos-Next.html">decided</a>&nbsp;it could no longer cooperate with the production limits because of the financial burden involved. Asking struggling producers to cut deeper would require a heavy sacrifice. Still, if OPEC pulled it off, it would be a lot more bullish for oil than a simple extension.</span></p>
<p><span>A third reason why the latest rumors are more significant than previous comments are because of where they are coming from. Iraq has been one of the laggards to the agreement, failing to fully comply with its promised output cuts for most of this year, so the cooperative tone from Iraq&rsquo;s oil minister carries more weight than if it had come from Saudi Arabia or Kuwait.</span></p>
<p><span>In fact, compliance has improved lately, with Iraq in particular carrying out deeper cuts. Iraq&rsquo;s oil minister said his country is now producing less than what is required as part of the deal &ndash; output stands at 4.32 mb/d, below its ceiling of 4.35 mb/d. That has contributed to more confidence in the OPEC deal, which is putting the oil market on a &ldquo;positive trend,&rdquo; al-Luaibi said.</span></p>
<p><span>Others dispute those figures, but whatever the exact production figures are, there is a general sense that Iraq is improving its compliance rate. Nevertheless, Iraq&rsquo;s spotty record warrants some skepticism, analysts say. &ldquo;News that Iraq is giving positive signals about supporting deepening cuts&rdquo; is helping oil prices, Nitesh Shah, commodities director at asset management firm ETF Securities, told&nbsp;<a href="https://www.wsj.com/articles/oil-advances-on-prospects-for-opec-to-extend-production-cuts-1505816423?tesla=y">the Wall Street Journal</a>. But, Iraq &ldquo;hasn&rsquo;t complied with its portion of the quota since this started so [prices] could come off very quickly,&rdquo; he warned.</span></p>
<p>The improved compliance rate comes at a time when Saudi Arabia is also specifically trying to target oil exports in order to take more barrels off of the global market. Saudi Arabia said that it will lower its exports by 350,000 bpd in October even though there is plenty of demand for its crude. &ldquo;Despite refiners&rsquo; request for more crude, the decision was made to maintain cuts,&rdquo; an industry source told<span>&nbsp;</span><a href="https://www.reuters.com/article/us-saudi-oil-allocations/saudi-arabia-plans-to-cut-crude-oil-allocations-in-oct-by-350000-bpd-idUSKCN1BI2RG">Reuters</a><span>&nbsp;</span>earlier this month. That could help improve the oil market outlook in the months ahead.</p>
<p>The expiration date of the current deal is drawing closer, and more importantly, there is one major official OPEC meeting left on the calendar (<a href="http://www.opec.org/opec_web/en/311.htm">November 30</a>) before that date arrives. That makes the upcoming meeting in Vienna in two months the crucial deadline for an extension.</p><p><strong>SEE ALSO:&nbsp;<a href="http://www.businessinsider.com/qatar-unfazed-by-arab-blockade-2017-9" >Qatar is unfazed by the Arab blockade</a></strong></p>
<p><a href="http://www.businessinsider.com/iraq-oil-minister-opec-comments-2017-9#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/what-you-missed-season-7-episode-7-finale-game-of-thrones-jon-snow-night-king-dragons-2017-8">6 details you might have missed on the season 7 finale of 'Game of Thrones'</a></p> http://www.businessinsider.com/oil-opec-big-question-2017-9There's one big question mark hanging over OPEC heading into 2018http://www.businessinsider.com/oil-opec-big-question-2017-9
Wed, 20 Sep 2017 01:14:00 -0400Elena Holodny
<p><img style="float:right;" src="http://static3.businessinsider.com/image/59c016c938d20d1f008b79c6-2400/rtx38o17.jpg" alt="saudi energy minister khalid al-falih" border="0" data-mce-source="Sergei Karpukhin/Reuters" data-mce-caption="Saudi Energy Minister Khalid al-Falih attends a session of the St. Petersburg International Economic Forum (SPIEF), Russia, June 2, 2017." /></p><p><span>The Saudi oil minister, Khalid al-Falih, has worked hard over the past year to get the majority of the world's biggest producers to combat a global supply glut by&nbsp;honoring agreed-upon output cuts.&nbsp;</span></p>
<p>Now, some are beginning to wonder what will happen with compliance when al-Falih&nbsp;finishes his one-year term as the president of the Organization of the Petroleum Exporting Countries (OPEC).</p>
<p>"One question mark hanging over OPEC for 2018 will be what will happen when al-Falih hands off the rotating presidency and will not be able to deploy the power of that office to crack the whip on errant producers and to steer the overall output agenda," Helima Croft, global head of commodity strategy at RBC Capital Markets, said in a note.</p>
<p>"Though always maintaining a placid public demeanor, the Saudi Oil Minister has worked tirelessly behind the scenes to force the producers to honor their output commitments," she explained. "He has also actively sought the views of some of the most important oil traders in order to better calibrate both production and export policy."</p>
<p><span></span>OPEC's compliance to the production cut agreement started out strong, but has slipped over the summer. Several countries have fallen short of commitment expectations including Iraq, Algeria, and the United Arab Emirates, according to Croft.</p>
<p><span>Al-Falih</span> is not&nbsp;the only&nbsp;person to&nbsp;wield a huge influence over&nbsp;OPEC&nbsp;action. Mohammed Barkindo, the cartel's secretary general since August 2016, has actively worked to <a href="http://www.businessinsider.com/most-important-oil-players-ahead-of-opec-meeting-2017-3">orchestrate cooperation</a> within OPEC and helped put together a coalition in favor of the November 2016 output agreement.</p>
<p><img src="http://static3.businessinsider.com/image/568edc00c08a80872f8b6ebd-2400/aramco.jpg" alt="Aramco" border="0" data-mce-source="Ali Jarekji/Reuters" data-mce-caption="A worker looks at journalists during a media tour of the Khurais oilfield, about 160 km (99 miles) from Riyadh, on June 23, 2008." /></p>
<p>The cartel and several other major producers (but not the US) first <a href="http://www.businessinsider.com/opec-deal-about-economic-problems-2016-12">agreed to cut production</a> back in November 2016, with the Saudis agreeing to bear&nbsp;the brunt of the cut. In May, they extended production cuts through March 2018. The decision to reduce production&nbsp;reflected producers' desires to end the global supply glut, which kept oil prices depressed for over two years and increased domestic <a href="http://www.businessinsider.com/opec-deal-about-economic-problems-2016-12">financial stresses</a>.</p>
<p>Against this backdrop, Saudi Crown Prince Mohammed bin Salman ("MBS") has been pushing forward with his Vision 2030 plan, which aims to curtail the kingdom's "<a href="http://www.reuters.com/article/us-saudi-economy-idUSKCN0XM1CD">addiction</a>" to oil via various measures including the public listing of a part of the kingdom's crown jewel, Saudi Aramco. This domestic agenda may be part of the reason for al-Falih's "sense of urgency," argued Croft.</p>
<p>"We contend that it is hard to overstate how much personal capital MBS has invested in the success of Vision 2030 and his political fortunes could ultimately hinge on the outcome of his ambitious economic agenda," she said. "The oil price imperative may recede if MBS is able to cement his authority and rack up some clear Vision 2030 policy wins, especially as generating non-oil income is the plan&rsquo;s ultimate goal.</p>
<p>"However, with 2018 set to be a crucial transition year for MBS and Saudi Arabia, we see no change in oil policy for the year barring a surprise leadership shake-up," Croft&nbsp;concluded. "Hence, Khalid al-Falih may have to employ his emeritus status to keep everyone in OPEC honest in 2018."</p>
<p>On Friday, OPEC's Joint Ministerial Monitoring Committee, the producer watchdog, is meeting in Vienna, where attendees are expected to draft their game plan for the next year. This will be one of the group's last meetings led by al-Falih.</p><p><strong>SEE ALSO:&nbsp;<a href="http://www.businessinsider.com/north-korea-economy-exports-imports-data-2017-9" >Here's what North Korea trades with the world</a></strong></p>
<p><a href="http://www.businessinsider.com/oil-opec-big-question-2017-9#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/gary-shilling-henry-blodget-life-career-advice-2017-8">GARY SHILLING: If you don't like your job, you're 'wasting precious time'</a></p> http://www.businessinsider.com/oil-price-iraq-oil-minister-cut-extension-2017-9Oil rolls over after a strong starthttp://www.businessinsider.com/oil-price-iraq-oil-minister-cut-extension-2017-9
Tue, 19 Sep 2017 12:21:00 -0400Elena Holodny
<p><img style="float:right;" src="http://static4.businessinsider.com/image/59c142d438d20d2b008b80e6-774/screen shot 2017-09-19 at 121603 pm.png" alt="Screen Shot 2017 09 19 at 12.16.03 PM" data-mce-source="Markets Insider" /></p><p>Oil reversed course after&nbsp;a strong start on Tuesday.</p>
<p>West Texas International crude, the US&nbsp;benchmark, was down by 0.5% at $50.08, while&nbsp;<span>Brent crude oil, the international benchmark, was lower&nbsp;by 0.7% at $55.06 per barrel&nbsp;</span>at 12:16 p.m. ET.</p>
<p>The commodity's prices&nbsp;climbed earlier in the morning after Iraqi oil minister Jabbar al-Luaibi said that although there's "no firm decision yet," some producers are thinking about deeper and longer cuts.</p>
<p>"<span>Some think that cuts should be extended beyond March, three or four months, or six months, or maybe till the end of 2018,&rdquo; he said, <a href="https://www.bloomberg.com/news/articles/2017-09-19/iraq-backs-additional-1-cut-in-oil-output-with-others-in-opec">according to Bloomberg</a>. "</span><span>Some, like Ecuador and other countries, even Iraq, think there should be another cut of 1%."</span></p>
<p><span>On Friday, OPEC's&nbsp;Joint Ministerial Monitoring Committee is meeting in Vienna. Attendees are expected to draft the cartel's "2018 action plan" ahead of the cartel's&nbsp;meeting in November, said Helima Croft, global head of currency strategy at RBC Capital Markets, in a research note published two weeks back.&nbsp;</span></p>
<p><span>"We believe that momentum continues to build for extending the output agreement beyond April, but finding a way to bring currently exempted countries into the agreement and curbing cheating looks more challenging," she said.</span></p>
<p><span>OPEC and non-OPEC producers <a href="http://www.businessinsider.com/opec-reportedly-agrees-to-extend-production-cuts-for-another-9-months-2017-5">agreed</a> in May to extend production cuts through March 2018. Notably, Saudi Arabia and Russia&nbsp;<a href="https://www.bloomberg.com/news/articles/2017-05-15/saudi-arabia-and-russia-favor-extending-opec-cuts-for-9-months">together</a>&nbsp;said they favored the extension before the official OPEC meeting.&nbsp;</span></p>
<p><span>The cartel and several other major&nbsp;producers (but not&nbsp;the US) first agreed to slash&nbsp;production back in November 2016, with the Saudis agreeing to the deepest&nbsp;cut. The decision to reduce production&nbsp;reflected producers' desires to end the global supply glut, which kept oil prices depressed for over two years and increased domestic&nbsp;</span><a href="http://www.businessinsider.com/opec-deal-about-economic-problems-2016-12">financial stresses</a><span>.</span></p><p><strong>SEE ALSO:&nbsp;<a href="http://www.businessinsider.com/north-korea-economy-exports-imports-data-2017-9" >Here's what North Korea trades with the world</a></strong></p>
<p><a href="http://www.businessinsider.com/oil-price-iraq-oil-minister-cut-extension-2017-9#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/donald-trump-pro-business-plan-lack-of-progress-caused-major-dollar-reversal-2017-8">Trump's lack of progress has caused a major dollar reversal</a></p> http://markets.businessinsider.com/news/stocks/oil-price-wti-just-hit-50-for-the-first-time-since-july-2017-9-1002370934Crude oil just hit $50 for the first time in 5 weekshttp://markets.businessinsider.com/news/stocks/oil-price-wti-just-hit-50-for-the-first-time-since-july-2017-9-1002370934
Thu, 14 Sep 2017 10:11:54 -0400Seth Archer
<p><img style="float:right;" src="http://static3.businessinsider.com/image/59ba87259803c5b3308b5518-1855/gettyimages-839117014.jpg" alt="Hurricane Harvey Corpus Cristi oil refinery" data-mce-source="Joe Raedle/Getty Images" data-mce-caption="An oil refinery is seen before the arrival of Hurricane Harvey on August 25, 2017 in Corpus Christi, Texas." /></p><p></p>
<p><a href="http://markets.businessinsider.com/commodities/oil-price?type=WTI">West Texas Intermediate,</a> a measure of US oil prices, hit $50 a barrel for the first time in 5 weeks on Thursday.</p>
<p>WTI Oil is currently trading at $50.30, up 2.01% from the&nbsp;close on Wednesday.</p>
<p>OPEC recently increased its projected demand for Europe and China while IEA increased projections for oil consumption globally, according to Jon Rigby, an analyst at UBS.</p>
<p>"The IEA and OPEC both upgraded 2017 demand growth forecasts last month and this month's round of updates saw the same again: the two agencies increased 2017 growth by 90,000 barrels a day and 50,000 barrels a day respectively to +1.60 million barrels per day and +1.42 million barrels per day," Rigby wrote.</p>
<p><span>Oil refineries in the US are coming back online and increasing their&nbsp;demand for crude after several Hurricanes rampaged through the southern states and delayed refinery operations. Rigby said only the IEA made reductions to its projects due to the hurricanes, though the reductions were relatively small. OPEC and IEA think increased production in both Canada and Kazakhstan will offset most of the production losses in the US.</span></p>
<p><span>OPEC members have publicly mulled over extending production cuts implemented earlier this year, which would further restrict the supply of oil. Statements made by ministers in Kuwait, Qatar and Venezuela have suggested that the production cuts would be extended, according to Rigby.</span></p>
<p><span>Brent oil is also trading higher, gaining 1.02% and currently trading for $55.66 per barrel.</span></p>
<h2><a href="http://markets.businessinsider.com/commodities/oil-price?type=WTI">Click here for the live price of oil.</a></h2>
<p><a href="http://markets.businessinsider.com/commodities/oil-price?type=WTI"><span><img src="http://static5.businessinsider.com/image/59ba870538d20d1f008b5f33-864/screen shot 2017-09-14 at 94016 am.jpg" alt="Oil price wti" data-mce-source="Markets Insider" data-link="http://markets.businessinsider.com/commodities/oil-price?type=WTI" /></span></a></p><p><strong>SEE ALSO:&nbsp;<a href="http://www.businessinsider.com/saudi-aramco-ipo-oco-global-ceo-mark-oconnell-2017-9" >'The family silver is up for sale': How the Saudi Aramco share offering marks the start of big changes for the kingdom</a></strong></p>
<p><a href="http://markets.businessinsider.com/news/stocks/oil-price-wti-just-hit-50-for-the-first-time-since-july-2017-9-1002370934#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/amazon-transformation-of-whole-foods-puts-entire-grocery-industry-on-notice-2017-8">Amazon's transformation of Whole Foods puts the entire grocery industry on notice</a></p> http://www.businessinsider.com/how-the-hurricanes-hurt-opec-2017-9How the hurricanes hurt OPEChttp://www.businessinsider.com/how-the-hurricanes-hurt-opec-2017-9
Tue, 12 Sep 2017 21:01:00 -0400Nick Cunningham
<p><img style="float:right;" src="http://static3.businessinsider.com/image/59a9a5e86eac40d82b8b6942-1500/oil tank hurricane harvey.jpg" alt="Oil Tank Hurricane Harvey" data-mce-source="REUTERS/Rick Wilking" data-mce-caption="An oil tank damaged by Hurricane Harvey is seen near Seadrift, Texas, August 26, 2017." /></p><p></p>
<p>Hurricane Irma was downgraded to a tropical storm early Monday, although it is still bringing floods and damage to much of Florida as it makes its way north,<span>&nbsp;</span><a href="https://www.reuters.com/article/us-storm-irma-energy-customers/more-than-3-million-customers-without-power-in-florida-after-hurricane-irma-idUSKCN1BL14U">leaving millions without power</a>.</p>
<p>As for the oil market, the impact of the storm will be felt almost exclusively on demand, with little to no effect on crude oil production or refining.</p>
<p>Goldman Sachs estimates that Hurricanes Harvey and Irma will leave a huge dent in oil demand, an effect that will be felt across the world. The two storms will lead to a reduction in global oil consumption by about 600,000 bpd for the month of September.</p>
<p>The investment bank says that Hurricane Harvey alone will lead to a plunge in oil demand by about 600,000 bpd in September, while Irma will cause demand to decline by 300,000 bpd. That decline is somewhat mitigated by the fact that Texas shale fields also were impacted by Harvey, leading to a production loss of 300,000 bpd. As a result, the net effect of the two storms is projected to be a decline of 600,000 bpd in consumption this month.</p>
<p>Goldman cautioned that its projection, particularly for Irma, is highly uncertain. Irma, at this point, is looking to be much less destructive than many had feared. But because Florida imports the vast majority of its fuel needs, the potential disruptions of major ports on the Florida coast will be pivotal. Even if they reopen quickly, they &ldquo;will potentially have draft restrictions that may hinder trade flows,&rdquo; Goldman says.</p>
<p><span>The hit to demand occurs at a time when seasonal factors also lead to a dip in consumption. End of peak summer driving should result in a seasonal decline of an additional 150,000 bpd.</span></p>
<p>Florida&rsquo;s power outages will probably be a bigger story going forward, affecting electricity markets and likely cutting into natural gas demand for quite some time. Florida&rsquo;s major utilities said it could take weeks to repair all the damage and restore power.</p>
<p>The lingering effects of the storm are dynamic though. Disrupted refining capacity along the Gulf Coast, along with the impact on millions of motorists, took a large bite out of oil demand, leading to temporary losses for WTI. The flip side is the threat to drillers could rise if refineries remain offline. Even as a lot of facilities have come back online in Texas, the remaining outages could still force Texas shale drillers to take production offline at some point in the near future. Goldman Sachs says the refining recovery effort in Texas/Louisiana is taking longer than expected, and as of September 11, when it issued its report, the investment bank estimates refinery outages still stand at about 2.24 million barrels per day.</p>
<p>Another caveat to the prospect of diminished demand from the hurricanes is that the recovery and reconstruction could boost demand, offsetting the initial negative effects. By October, the 900,000 bpd impact narrows to just 300,000 bpd. And based on past hurricanes, demand could actually rise &ldquo;to a level higher than would have been the case had there been no hurricane, which would translate into a positive demand shock,&rdquo; Goldman says.</p>
<p>But for now, our working assumption is that global oil demand could be reduced by at least 600,000 bpd in September because of the two hurricanes. Put another way, global oil inventories could see a boost of 600,000 bpd from the storms.</p>
<p>That almost guarantees that OPEC will feel compelled to extend their production cuts beyond the March 2018 expiration date. There have been a series of comments coming from top OPEC officials and energy ministries from OPEC nations regarding the possible extension. Saudi Arabia&rsquo;s energy minister Khalid al-Falih<span>&nbsp;</span><a href="https://www.bloomberg.com/news/articles/2017-09-10/saudi-arabia-venezuela-agree-to-leave-rebalancing-options-open">said</a><span>&nbsp;</span>over the weekend that he and his counterparts from Venezuela, UAE and Kazakhstan were open to cuts &ldquo;beyond the first quarter of 2018, if needed.&rdquo;</p>
<p>Well, the two hurricanes that just hit the U.S. increased the chances that the extension will indeed be needed.</p><p><strong>SEE ALSO:&nbsp;<a href="http://www.businessinsider.com/deutsche-bank-on-dollar-weakness-2017-9" >DEUTSCHE BANK WARNS: 'The dollar is in trouble'</a></strong></p>
<p><a href="http://www.businessinsider.com/how-the-hurricanes-hurt-opec-2017-9#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/heres-how-us-could-prevent-nuclear-strike-north-korea-cyber-attack-hacking-2017-4">How the US could prevent a North Korean nuclear strike — according to a former Marine and cyberwarfare expert</a></p> http://www.businessinsider.com/opec-deal-extension-expectations-2017-8Get ready for OPEC to extend its dealhttp://www.businessinsider.com/opec-deal-extension-expectations-2017-8
Sun, 27 Aug 2017 20:05:00 -0400Tsvetana Paraskova
<p><img style="float:right;" src="http://static3.businessinsider.com/image/59a01f906eac4020008b49c2-2400/rtx12n3n.jpg" alt="cup of oil" data-mce-source="Todd Korol/Reuters" data-mce-caption="A worker holds a cup of heavy oil before it is shipped to the market." /></p><p></p>
<p>The oil market is moving in the right direction towards rebalancing, but all options, including extending the cuts beyond March 2018, are left open, the joint OPEC/non-OPEC committee set up to monitor compliance with the cuts and the state of the oil market<span>&nbsp;</span><a href="http://www.opec.org/opec_web/en/press_room/4499.htm">said</a><span>&nbsp;</span>on Thursday.</p>
<p>The Joint OPEC-Non-OPEC Ministerial Monitoring Committee (JMMC)&mdash;which has been holding meetings in Vienna this week to discuss&nbsp;<a href="http://oilprice.com/Energy/Oil-Prices/Oil-Holds-Steady-As-OPEC-Meets-To-Talk-Slipping-Compliance.html">slipping conformity</a>&nbsp;with the pledges&mdash;pointed to a better-than-expected global oil demand growth for this year, and expectations for further growth next year as one of the reasons for optimism. In addition, the OPEC/non-OPEC panel pointed to oil commercial stocks declining in July&mdash;and along with it the latest five-year average&mdash;compared to the start of this year. The narrowing contango has also contributed to a drop in floating storage since June, the committee noted. &nbsp;</p>
<p>OPEC&rsquo;s de facto leader Saudi Arabia and the leader of the non-OPEC producers, Russia, have discussed extending the cuts by three months into June 2018, and such a move would likely be on the agenda of the November 30 OPEC summit, S&amp;P Global Platts<span>&nbsp;</span><a href="https://www.platts.com/latest-news/oil/london/opecnon-opec-monitoring-committee-says-oil-cuts-26792985">reported</a><span>&nbsp;</span>today, citing sources.</p>
<p><span>According to energy and commodities analysts, a three-month extension would be a logical step to take in the autumn when the oil market sentiment would likely sour again. An extension to June 2018 would also prevent a &ldquo;severe uptick&rdquo; in surplus after March next year, as Michael Cohen, head of energy commodities analysis for Barclays, told Platts.</span></p>
<p>According to Joe McMonigle, senior energy policy analyst at Hedgeye Potomac Research, an extension at the November meeting would be the minimum action OPEC would take.</p>
<p>&ldquo;The market will be looking for stronger action, like deeper cuts,&rdquo; McMonigle noted.</p>
<p>Immediately after OPEC announced at the end of May the extension of the cuts into March 2018, oil prices plunged, because the market was expecting a more drastic action, like deeper cuts, that would prove that OPEC really was willing to do &ldquo;whatever it takes&rdquo; to bring the market back to balance.</p>
<p>The joint panel also said today that it planned to invite Libya and Nigeria to attend the next meetings of the committees, in a sign that rising output from those two exempt producers is now a concern for OPEC. The next JMMC Meeting will be held in Vienna on September 22, 2017.</p><p><strong>SEE ALSO:&nbsp;<a href="http://www.businessinsider.com/oil-price-spike-could-hurt-industry-2017-8" >The next oil price spike could cripple the industry</a></strong></p>
<p><a href="http://www.businessinsider.com/opec-deal-extension-expectations-2017-8#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/what-you-missed-season-7-episode-7-finale-game-of-thrones-jon-snow-night-king-dragons-2017-8">6 details you might have missed on the season 7 finale of 'Game of Thrones'</a></p> http://www.businessinsider.com/saudi-arabia-versus-qatar-economic-growth-2017-8Qatar is outpacing Saudi Arabia in economic growth — despite the sanctionshttp://www.businessinsider.com/saudi-arabia-versus-qatar-economic-growth-2017-8
Tue, 22 Aug 2017 20:59:00 -0400Zainab Calcuttawala
<p><img style="float:right;" src="http://static3.businessinsider.com/image/599c2ab6b0e0b5901a8b64a5-1595/rtsv17v.jpg" alt="Sheikh Tamim bin Hamad Al Thani, the Emir of Qatar" data-mce-source="Reuters/Carl Court/Pool" data-mce-caption="Sheikh Tamim bin Hamad Al Thani, the Emir of Qatar smiles as he speaks to Britain's Prime Minister Theresa May during a bilateral meeting at the Gulf Cooperation Council summit, in Manama, Bahrain." /></p><p>Despite the torrent of reports attesting to the non-impact of the Saudi Arabia-led diplomatic boycott of Doha, new estimates by Bloomberg&rsquo;s economic survey predict that 2017 will be Qatar&rsquo;s<span>&nbsp;</span><a href="http://www.worldoil.com/news/2017/8/17/qatars-growth-prospects-dim-as-saudi-led-boycott-takes-its-toll">slowest</a><span>&nbsp;</span>year of GDP growth since 1995.</p>
<p>A previous study in June forecasted 3.1 percent and 3.2 percent growth for this year and next, respectively. New figures reduce those numbers to 2.5 percent for 2017 and 3.2 percent for 2018. The deficit figures jump to 5.1 percent for the current period, compared to previous estimates at 4.6 percent.</p>
<p>The current feud between Gulf monarchies began on June 5<sup>th</sup>, when Saudi Arabia expressed its indignation at an insubordinate Qatar.</p>
<p>Energy interests, most notably Doha&rsquo;s shared custody of the South Pars gas field &ndash; the largest of its kind &ndash; prevent Qatar from cutting relations with Shiite Iran, the Sunni Saudi government&rsquo;s main rival in the Middle East.</p>
<p>&ldquo;Even before the diplomatic crisis with regional powers, it looked like Qatar&rsquo;s non-energy economy would slow,&rdquo; William Jackson, of Capital Economics told World Oil. &ldquo;The early signs are that the sanctions dealt a damaging blow to Qatar&rsquo;s economy in June. The impact appears to be temporary, but it will still result in weaker growth."</p>
<p>To be clear, Qatari exports of natural gas have not been affected by the diplomatic row.</p>
<p>The biggest casualty has been GCC-funded projects, namely food-processing and port facilities, that now face an uncertain future.</p>
<p>&ldquo;The illegal actions of our neighbors have been the catalyst for us to accelerate our economic plans and renew our commitment to diversification and sustained growth,&rdquo; said Sheikh Tamim bih Hamid at Thani. &ldquo;We fully expect to see a strong return of the Qatari economy this year and growth over the years to come.&rdquo;</p>
<p>Qatar Petroleum also guarantees an increase in oil equivalent output topping one million barrels per day between the next five to seven years.</p>
<p>Doha&rsquo;s unbeatable diplomatic flexibility plays a large role in carving out its niche in the region. The variety in its alliances will prove its immunity from the disciplinary tendencies of Saudi Arabia over the next 12 months.</p>
<p>"We expect the disruptive impact of the boycott to have evaporated by next year," said Farouk Soussa of Citigroup Middle East. "Trade routes will have been fully reconfigured, confidence will have been restored, building will recommence -- all possibly against a backdrop of a continued boycott, but one that the economy has adapted to."</p>
<p>Though the extent of Qatar&rsquo;s economic expansion sees new limits, it still outpaces its former GCC allies. It is ahead of Saudi Arabia by 0.5 percent and the United Arab Emirates by two percent, the latest surveys say. And that is a problem for the GCC, especially for Saudi Arabia.</p>
<p>As Hajj season<span>&nbsp;</span><a href="https://www.washingtonpost.com/business/qatar-denies-blocking-saudi-planes-ferrying-pilgrims-to-hajj/2017/08/21/1f07ce80-865c-11e7-96a7-d178cf3524eb_story.html?utm_term=.7297dfd1cea8">approaches</a>, Doha continues to deny any efforts to block any Muslims&rsquo; timely arrival in Mecca or Medina. Qatar&rsquo;s Civil Aviation Authority issued a statement on Monday that denied its intent to block Saudi Arabian planes from landing or departing from its airports.</p>
<p>To be fair, the KSA has done the same. Recently, Riyadh reopened its lander border to allow Qataris to enter the Islamic holy lands, and offered other citizens a flight into the country.</p>
<p>Even plans for<span>&nbsp;</span><a href="http://www.chronicle.co.zw/qatar-says-no-delays-on-world-cup-2022/">World Cup 2022</a><span>&nbsp;</span>in Qatar&rsquo;s desert heat seem to remain undisturbed.</p>
<p>According to Hassan Al-Thawadi, Secretary General of the Supreme Committee for Delivery and Legacy, the blockade has caused &ldquo;an inconvenience&rdquo; in delivering on its soccer field promises. Still, &ldquo;progress is being made&rdquo; and the predetermined schedule has yet to see adjustments.</p>
<p>Projections for economic growth are consistently in flux. Whether or not Qatar meets its 3.1 percent growth rate this year is a factor of will power, bureaucratic know-how and international diplomacy, especially when a country has lost its major regional allies. So far, Doha&rsquo;s resilience sees no foreseeable cracks.</p><p><strong>SEE ALSO:&nbsp;<a href="http://www.businessinsider.com/cuban-oil-exploration-project-2017-8" >Foreign oil has its eyes on 44 billion barrels in Cuba</a></strong></p>
<p><a href="http://www.businessinsider.com/saudi-arabia-versus-qatar-economic-growth-2017-8#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/what-happens-two-hurricanes-collide-fujiwhara-effect-2017-9">Here's what happens when two hurricanes collide</a></p> http://www.businessinsider.com/deeper-oil-cuts-are-still-on-the-table-for-saudi-arabia-2017-8Deeper oil cuts are still on the table for Saudi Arabiahttp://www.businessinsider.com/deeper-oil-cuts-are-still-on-the-table-for-saudi-arabia-2017-8
Mon, 14 Aug 2017 21:00:00 -0400Tsvetana Paraskova
<p><img style="float:right;" src="http://static5.businessinsider.com/image/5991b72ef1a850060a8b493f-2222/rtx9bwo.png" alt="Saudi Arabia trader oil" data-mce-source="Reuters/Fahad Shadeed" data-mce-caption="Saudi traders monitor stocks at the Saudi Investment Bank in Riyadh." data-link="http://pictures.reuters.com/C.aspx?VP3=SearchResult&amp;VBID=2C0BXZIBZKO0M&amp;SMLS=1&amp;RW=1206&amp;RH=825#/SearchResult&amp;VBID=2C0BXZIBZKO0M&amp;SMLS=1&amp;RW=1206&amp;RH=825&amp;PN=4&amp;POPUPPN=230&amp;POPUPIID=2C0BF1G9DMVP" /></p><p>OPEC and its non-OPEC partners have not closed the door to the possibility of extending the production cut agreement or even lowering production levels, Saudi Oil Minister Khalid al-Falih<span>&nbsp;</span><a href="https://english.aawsat.com/s-alabyad/business/saudi-arabia-iraq-stress-commitment-cut-oil-production">told</a><span>&nbsp;</span>Saudi-owned newspaper Asharq Al-Awsat in remarks published on Friday.</p>
<p>Al-Falih&rsquo;s comments were aired just a day after OPEC confirmed reports that its crude oil production increase last month, reporting a daily rate of<span>&nbsp;</span><a href="http://oilprice.com/Energy/Oil-Prices/Oil-Glut-Endures-As-OPEC-Confirms-Higher-Output.html">32.869 million barrels</a>, up by 172,600 bpd. Libya, Nigeria, and Saudi Arabia were the main drivers behind the OPEC production increase, with Libya raising its output by 154,300 bpd&mdash;by far the biggest increase among the cartel&rsquo;s members. Nigerian oil production rose by 34,300 bpd to 1.748 million bpd, while Saudi Arabia&rsquo;s went up by 31,800 bpd to 10.067 million bpd.</p>
<p>&ldquo;The possibility of continued production cuts is on the table, and the door to extension of reduction has not been closed. If further actions are needed by the market, whether to extend or change production levels, they will be examined on time and agreed through 24 countries,&rdquo; Asharq Al-Awsat quoted the Saudi minister as saying.</p>
<p>Saudi Arabia, however, will not take unilateral actions to tweak production and will seek consensus among all parties concerned, according to the most influential of OPEC&rsquo;s oilmen.</p>
<p>Earlier this week, OPEC<span>&nbsp;</span><a href="http://www.opec.org/opec_web/en/press_room/4485.htm">held</a><span>&nbsp;</span>a meeting with some of the producers and cited its members Iraq and the UAE, as well as non-OPEC signatories to the deal Kazakhstan and Malaysia, as laggards in compliance, but added that they &ldquo;all expressed their full support for the existing monitoring mechanism and their willingness to fully cooperate.&rdquo;</p>
<p>&ldquo;It is too early to predict what will happen following the first quarter of next year,&rdquo; al-Falih told the Saudi newspaper.</p>
<p>Just two months ago, the minister told the same outlet that the oil market had started to show signs that it was headed in the right direction, and expectations pointed to the market<span>&nbsp;</span><a href="http://oilprice.com/Energy/Oil-Prices/Saudi-Oil-Minister-Oil-Markets-To-Rebalance-In-Q4-2017.html">returning to balance</a><span>&nbsp;</span>in the fourth quarter this year.</p>
<p>The shrinking contango structure of the oil market has<span>&nbsp;</span><a href="http://oilprice.com/Energy/Energy-General/Oil-Futures-Point-To-Higher-Oil-Prices.html">almost disappeared</a><span>&nbsp;</span>of late, in a sign that the market is tightening.</p><p><strong>SEE ALSO:&nbsp;<a href="http://www.businessinsider.com/oil-price-jobs-report-boost-2017-8" >The jobs report boosts oil</a></strong></p>
<p><a href="http://www.businessinsider.com/deeper-oil-cuts-are-still-on-the-table-for-saudi-arabia-2017-8#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/all-people-blue-eyes-have-common-ancestor-2017-9">All blue-eyed people have a single ancestor in common</a></p> http://www.businessinsider.com/venezuela-crisis-could-push-oil-prices-up-2017-8Venezuela's deteriorating crisis could send oil to $80 a barrelhttp://www.businessinsider.com/venezuela-crisis-could-push-oil-prices-up-2017-8
Tue, 08 Aug 2017 19:37:00 -0400Nick Cunningham
<p><img style="float:right;" src="http://static2.businessinsider.com/image/5989c3124fc3c01c018b6805-711/oads-blocked-round-venezuela-as-anti-maduro-protests-persist.jpg" alt="Demonstrators stand next to a bus burns near a protest against Venezuela's President Nicolas Maduro's government in Caracas, Venezuela. REUTERS/Christian Veron" data-mce-source="Thomson Reuters" data-mce-caption="Demonstrators stand next to a bus burns near a protest against Venezuela's President Nicolas Maduro's government in Caracas" /></p><p>Venezuela&rsquo;s deteriorating crisis is &ldquo;going to be the biggest geopolitical story to watch in the oil markets," according to Helima Croft of RBC Capital Markets.</p>
<p><span>The economic, political and security situation in Venezuela has been frightening for quite a while, but things continue to grow worse. The new &ldquo;constituent assembly,&rdquo; put together to rewrite the constitution, is seen by most as an attempt to erode the nation&rsquo;s democracy and consolidate power in the hands of the president.</span></p>
<p>In an ominous sign, more than a dozen soldiers<span>&nbsp;</span><a href="https://www.reuters.com/article/us-venezuela-politics-idUSKBN1AM0HA">reportedly</a><span>&nbsp;</span>attacked a Venezuelan military base on Sunday, and although the assault was put down, it highlights the increasing fragility of the state. "The significance lies in whether this suggests that Maduro is losing his grip on the military and whether we can expect to see more mutinies to come, or if this is just an isolated incident,&rdquo; said Stuart Culverhouse, Global Head of Macro &amp; Fixed Income Research at Exotix Capital in London. "Details are sparse and it&rsquo;s probably too early to say either way at this stage.&rdquo;</p>
<p><span>But even if Venezuelan President Nicolas Maduro manages to maintain power and push through a new constitution that defangs any restraints on his grip, he won&rsquo;t be able to outrun the spiraling economic crisis. Perhaps the most visible economic issue is the debt payments that fall due this year. Venezuela has $5 billion in debt maturing before the year is out &ndash; both in sovereign bonds and in debt payments by state-owned oil company PDVSA.</span><span></span></p>
<p><span>That is an alarming figure given that the government has an estimated $3 billion in cash reserves, according to S&amp;P Global Ratings, a paltry sum that means a default in the next few months is more likely than not. Venezuela has to pay $725 million in debt payments this month, although the problem gets really serious in October and November, when a combined $3.6 billion in debt must be paid to bondholders. The value of PDVSA&rsquo;s bonds has plunged in recent weeks.</span></p>
<p><span>Any measures from the U.S. government would likely&nbsp;<a href="http://oilprice.com/Energy/Energy-General/US-Oil-Sanctions-Could-Push-Venezuela-To-The-Brink.html">push Venezuela over the edge</a>, one reason why the Trump administration has held back for now. But the U.S. Treasury Department has not taken some sort of embargo or sanctions policy targeting Venezuela&rsquo;s oil sector off of the table. Venezuela exports just under 800,000 bpd to the U.S., which accounts for about half of the country&rsquo;s exports. That source of revenue is the only thing keeping the government going right now.</span></p>
<p>&ldquo;There&rsquo;s a huge dependency on exports to the United States at a time of profound economic turbulence. It would be basically cutting off the single most important source of revenue. It would significantly raise the risks of default,&rdquo; Roberto Simon, lead analyst for Latin America at FTI Consulting,<span>&nbsp;</span><a href="https://www.wsj.com/articles/venezuelan-default-fears-rise-with-billions-in-debt-coming-due-soon-1501680162">told the WSJ</a>.</p>
<p>The probability of default within 12 months, based on the value of credit-default swaps on Venezuelan debt, has an implied rate of 70 percent, according to the WSJ.</p>
<p>In a sign that the situation for PDVSA is growing worse,<span>&nbsp;</span><a href="http://www.reuters.com/article/us-venezuela-usa-citgo-pete-idUSKBN1AJ1JI">Reuters</a><span>&nbsp;</span>reports that the oil company is sending fewer barrels to its U.S.-based refiner, Citgo. The lower exports come as PVDSA has to send more oil to Russia&rsquo;s Rosneft as repayment for a prior loan the Russian company made. But because those barrels sent to Rosneft are used as repayment, and aren&rsquo;t sales, PDVSA will take in less revenue by reducing shipments to the U.S.</p>
<p>It is hard to see how Venezuela avoids a credit event in the next half-year or so. A Venezuelan default might not lead to contagion in the bond market, even if the value of missed payments is large &ndash; the WSJ says it could be one of the largest in history &ndash; because the Venezuelan economy has grown more isolated in recent years.</p>
<p>However, the effect on the oil price could be significant. Venezuela produces about 1.9 million barrels of oil per day, a volume that is nearly as large as the global surplus was at its maximum point during the market downturn in the past three years. If some significant portion of that goes offline, it would certainly send oil prices sharply up.</p>
<p>"The question is how fast does Venezuela fail?" Helima Croft of RBC Capital Markets<span>&nbsp;</span><a href="https://www.cnbc.com/2017/08/02/this-hot-spot-could-push-oil-to-80-a-barrel-within-months-rbcs-croft.html">said on CNBC</a><span>&nbsp;</span>last week. "The thing is Venezuela has no capacity to overproduce at this point. Their oil production is going in one direction and that is down," she said.</p>
<p>"The national oil company owes $3.5 billion due in October-November. They are unlikely to make those payments," Croft said. &ldquo;We really do think a disorderly default is on the cards for Venezuela."</p>
<p>A default might then put some of Venezuela&rsquo;s oil assets in the sights of bondholders, who could try to seize oil cargoes in lieu of repayment. The end result, one way or another, is likely a decline of oil exports from Venezuela, sending a jolt through the oil market.</p>
<p>Ultimately, that could push oil prices up to $70 to $80 per barrel later this year, Croft predicts.</p><p><strong>SEE ALSO:&nbsp;<a href="http://www.businessinsider.com/russia-us-and-venezuela-oil-connection-2017-8" >Russia is poised to own a stake in US oil</a></strong></p>
<p><a href="http://www.businessinsider.com/venezuela-crisis-could-push-oil-prices-up-2017-8#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/apple-ios11-iphone-software-features-tips-tricks-power-user-video-2017-9">The 5 best hidden features from the latest iPhone update</a></p> http://www.businessinsider.com/nigeria-and-angola-benefitting-from-opec-production-cut-2017-82 OPEC members are benefitting from the production cuthttp://www.businessinsider.com/nigeria-and-angola-benefitting-from-opec-production-cut-2017-8
Sun, 06 Aug 2017 13:46:00 -0400Irina Slav
<p><img style="float:right;" src="http://static3.businessinsider.com/image/5984806d76084a26008b56e6-647/opec-panel-looking-at-deepening-extending-oil-cuts-sources-2017-5.jpg" alt="FILE PHOTO: A flag with the Organization of the Petroleum Exporting Countries (OPEC) logo is seen before a news conference at OPEC's headquarters in Vienna, Austria, December 10, 2016. REUTERS/Heinz-Peter Bader/File Photo - RTX35UO5" data-mce-source="Thomson Reuters" data-mce-caption="FILE PHOTO: A flag with the OPEC logo is seen before a news conference in Vienna" /></p><p>While OPEC is preparing for yet another meeting to discuss compliance with its notorious production cut deal, two of its members are<span>&nbsp;</span><a href="https://www.reuters.com/article/westafrica-oil-margins-idUSL5N1KM5CO">enjoying<span>&nbsp;</span></a>something of a windfall thanks to high demand for their crude grades from refiners around the world. In the latest sign that the market does indeed abhor a vacuum, Nigerian and Angolan crude oil is taking the place of the crude of Middle Eastern produces that are cutting their exports as part of the deal.</p>
<p>Nigeria is exempt from the cut, at least for the time being. Angola isn&rsquo;t exempt, but this fact is not preventing it from raising its exports to certain coveted destinations, including Asia and the U.S., stepping in for Saudi Arabia in Asia and Venezuela in the U.S. as refining margins in both regions run high amid peak demand.</p>
<p>Data from the Energy Information Administration shows that after a dip to<span>&nbsp;</span><a href="https://www.eia.gov/dnav/pet/pet_move_impcus_a2_nus_epc0_im0_mbbl_m.htm">844,000 barrels</a><span>&nbsp;</span>in March, Angolan crude oil exports to the U.S. jumped to 2.53 million barrels in April and to 3.24 million barrels in May. According to traders who spoke to Reuters, last month Angola loaded almost 8 million barrels for the U.S. and Canada. Nigerian exports to the U.S. have also been strong, although between March and May the monthly shipments have declined from 10.2 million to 8.7 million barrels.</p>
<p>U.S. refinery runs are at two-year highs, and European refiners are also boosting output, with forecasters seeing these runs hit the highest in six years before Shell&rsquo;s 400,000-bpd Pernis refinery, the biggest on the continent,<span>&nbsp;</span><a href="https://www.ft.com/content/092915b9-9349-301e-be91-b336aa5be665">shut down<span>&nbsp;</span></a>for two weeks after a fire. This means that the other refineries will spread the load among themselves, analysts believe, unwilling to miss out on the strong margins.</p>
<p><span>In China, demand for crude from teapots is a major driver of higher Nigerian and Angolan exports as they compete with state-owned refiners. Interestingly, analysts are seeing this support after&nbsp;</span><a href="http://www.reuters.com/article/us-china-oil-demand-analysis-idUSKBN19C168">reports<span>&nbsp;</span></a><span>from June, which warned that Chinese demand for crude is likely to slacken during the third quarter as a tenth of refining capacity will be shut down despite the summer driving season where demand reaches its peak, because of a fuel glut on the domestic market.</span></p>
<p>In addition to strong refining margins that are motivating refiners to boost purchases of crude, Nigeria and Angola also have the specific types of their crudes working for them. Angola&rsquo;s heavy sour crude is a welcome replacement for Venezuelan oil, which U.S. Gulf Coast refineries need to produce oil products. It is just as welcome elsewhere where refineries need heavy and sour crude to operate.</p>
<p>At the same time, some refiners are switching to light crude, thanks to a booming supply from U.S. shale, Libya, and Nigeria. This switch has fed higher demand for Nigerian light crude, with the Forcados blend trading at a US$1.70 premium to dated Brent. Angola&rsquo;s Cabinda is changing hands at a three-year-high premium to the benchmark at US$0.40 per barrel, and so is Girassol, at US$0.50 per barrel.</p>
<p>It&rsquo;s likely that this will change as the capacity cuts in China&rsquo;s state-owned refineries are felt, but it is possible that strong demand from Europe and North America will compensate for this capacity reduction. Already two-thirds of Angola&rsquo;s September exports have been bought, within a week of them being made available.</p><p><strong>SEE ALSO:&nbsp;<a href="http://www.businessinsider.com/r-opec-non-opec-hold-informal-talks-to-nail-new-oil-cuts-2017-5" >OPEC, non-OPEC hold informal talks to nail new oil cuts</a></strong></p>
<p><a href="http://www.businessinsider.com/nigeria-and-angola-benefitting-from-opec-production-cut-2017-8#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/apple-ios11-iphone-software-features-tips-tricks-power-user-video-2017-9">The 5 best hidden features from the latest iPhone update</a></p> http://www.businessinsider.com/the-arab-spring-may-have-disarmed-opec-2017-8The Arab Spring may have disarmed OPEChttp://www.businessinsider.com/the-arab-spring-may-have-disarmed-opec-2017-8
Thu, 03 Aug 2017 21:46:00 -0400Nick Cunningham
<p><img style="float:right;" src="http://static2.businessinsider.com/image/598355f64fc3c01c018b4f69-644/opec-sees-oil-market-rebalancing-at-slower-pace-says-output-rises-2017-6.jpg" alt="FILE PHOTO: The OPEC logo is seen outside the group's headquarters in Vienna, Austria May 24, 2017. REUTERS/Leonhard Foeger/File Photo" data-mce-source="Thomson Reuters" data-mce-caption="FILE PHOTO: The OPEC logo is seen outside the group's headquarters in Vienna" /></p><p>OPEC is struggling with a floundering oil market, few prospects of higher oil prices, competition from U.S. shale, and dissension within its own ranks. The supply/demand situation is improving, but at a painfully slow pace. OPEC will meet again in a few days to try to figure out how to boost compliance with the collective cuts, but the group is faced with no good options in trying to balance the market.</p>
<p>The prospect of deeper cuts has been floated, but the risk is that it would require more sacrifice with an uncertain payoff. In any event, OPEC appears to be struggling with maintaining compliance for its existing cuts. Although some dispute the data, it appears that more than half of the participating OPEC members are not fully complying with their obligations. Worse, Nigeria and Libya, exempted from the deal, are boosting output. OPEC production actually jumped in July by 90,000 bpd, according to a<span>&nbsp;</span><a href="https://www.reuters.com/article/us-opec-oil-idUSKBN1AG1SN">Reuters</a>&nbsp;survey, putting collective output at its highest point so far this year.</p>
<p>In the past, OPEC has fine-tuned its output levels over time, making multiple cuts in response to market conditions. That makes the current deal, consisting of one cut that has been extended, atypical. History suggests OPEC could simply follow up with a deeper reduction in order to boost prices.</p>
<p>But OPEC no longer has that luxury. Unlike in the past, the group can no longer afford to ride out an extended period of low prices. In the 1980s when the group abandoned any sense of cooperation and produced at maximum capacity, it crashed oil prices for years, a downturn that arguably extended until the beginning of the 21st century (aside from a temporary period of time during the Persian Gulf War). That downturn worked in the sense that U.S. oil production went into a long-term decline that many thought would be terminal.</p>
<p>OPEC can no longer afford to ride out a wave of low oil prices that could last upwards of a decade or more in order to kill off rival production from places like the United States. That is because the major oil producers of the Middle East have dramatically higher spending levels than they did in the past. Ever since the Arab Spring, which saw widespread discontent and instability spread throughout the region, Saudi Arabia and other Gulf States had to shower their populaces in social spending in order to stave off rebellion. So, while they still have some of the lowest oil production costs in the world &ndash; costing just a few dollars to produce a barrel of oil &ndash; the real costs come from the broader government budget.</p>
<p>For example, the<span>&nbsp;</span><a href="https://www.wsj.com/amp/articles/opec-has-a-crippling-problem-its-members-cant-stop-pumping-1501443711">WSJ</a>&nbsp;notes that the UAE can produce oil for about $12 per barrel, but it actually needs something like $67 per barrel to balance its budget &ndash; a fiscal breakeven price far above the prevailing market price for the last three years. But the UAE is far from the worst off. A report from Fitch from earlier this year, and reported on by<span>&nbsp;</span><a href="https://www.bloomberg.com/news/articles/2017-04-06/kuwait-is-best-off-nigeria-worst-in-fitch-s-2017-oil-break-even">Bloomberg</a>, laid out fiscal breakeven prices for oil-producing countries:</p>
<p>&bull; Nigeria at $139</p>
<p>&bull; Bahrain at $84</p>
<p>&bull; Angola at $82</p>
<p>&bull; Oman at $75</p>
<p>&bull; Saudi Arabia at $74</p>
<p>&bull; Russia at $72</p>
<p>&bull; Kazakhstan at $71</p>
<p>&bull; Gabon at $66</p>
<p><span>&bull; Azerbaijan at $66</span></p>
<p>&bull; Iraq at $61</p>
<p>&bull; Abu Dhabi, United Arab Emirates, at $60</p>
<p>&bull; Republic of Congo at $52</p>
<p>&bull; Qatar at $51</p>
<p>&bull; Kuwait at $45</p>
<p>There are several important points from figures like these. First, it explains why compliance with the promised OPEC cuts has been slipping. Financial pressure on countries like Iraq and the UAE incentivize cheating. Ecuador calculated that it could no longer stick to its reductions and decided to abandon the OPEC agreement a few weeks ago. The WSJ says that 7 out of the 11 participating members are not fully complying.</p>
<p>More importantly, however, is that many OPEC members are now running budget deficits. For decades, the Gulf States had huge surpluses, but painful fiscal shortfalls now mean that OPEC cannot tolerate low oil prices forever. Many major Middle Eastern producers have had to make painful cuts to spending, an austerity campaign that has hit growth in the region.</p>
<p>All of that is to say that OPEC probably does not have the appetite for deeper cuts. The only way they would cut deeper is if they were confident that oil prices would rise substantially, a highly uncertain prospect in today&rsquo;s market.</p>
<p><span>The more likely scenario is that they keep the current reductions through March 2018, and Saudi Arabia will try to browbeat its peers into keeping compliance high. It is not a great situation for the group to be in. &ldquo;OPEC will have lot of difficulties to respect its commitments because of budgetary difficulties faced by some its member countries,&rdquo; Chakib Khelil, the former oil minister of Algeria, told the WSJ.</span><span></span></p>
<p>If oil prices do not rise, the longer-term prospects are even darker. OPEC has no &ldquo;exit strategy&rdquo; in mind next year. Again, just as there is little to no appetite for deeper cuts, there is probably not a lot of excitement within OPEC to extend the deal again beyond the first quarter of 2018. That raises the prospect of returning to full production, a scenario that could cause prices to crash once again.</p>
<p>The possibility of oil prices remaining around $50 per barrel or lower for years to come is a serious threat to the financial health of many oil-producing countries. The ongoing implosion of Venezuela is largely an outgrowth of low oil prices.</p>
<p>Producers in the Middle East have a lot more financial firepower to work with, but they cannot hold on forever. More instability in more countries is likely. The WSJ notes that Saudi Arabia has burned through about $246 billion in cash reserves since 2014 while also turning to the debt markets. &ldquo;We calculate, and a lot of people we know calculate, there&rsquo;s about three more years of this they could deal with, with regard to drawdowns in the sovereign funds&mdash;and then they&rsquo;ve got a very severe problem,&rdquo; Tim Dove, CEO of Pioneer Natural Resources Co., told the WSJ.</p><p><strong>SEE ALSO:&nbsp;<a href="http://www.businessinsider.com/countries-arent-complying-with-opec-and-it-could-ruin-oils-rally-2017-8" >Some countries aren't complying with OPEC and it could ruin oil's rally</a></strong></p>
<p><a href="http://www.businessinsider.com/the-arab-spring-may-have-disarmed-opec-2017-8#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/garbage-can-trash-911-memorial-nyc-tokyo-london-2016-8">Why you won't find a garbage can near the 9/11 memorial</a></p> http://www.businessinsider.com/oil-prices-saudi-arabia-opec-production-cuts-2017-7Saudi Arabia's production cuts are boosting oil priceshttp://www.businessinsider.com/oil-prices-saudi-arabia-opec-production-cuts-2017-7
Mon, 31 Jul 2017 21:01:00 -0400Matt Smith
<p><img style="float:right;" src="http://static2.businessinsider.com/image/597f3a8f4528e61d218b55e6-2400/ap17145621141251.jpg" alt="Saudi oil minister Khalid Al-Falih" data-mce-source="AP Photo/Ronald Zak" data-mce-caption="Khalid Al-Falih Minister of Energy, Industry and Mineral Resources of Saudi Arabia attends a news conference after a meeting of the Organization of the Petroleum Exporting Countries, OPEC, at their headquarters in Vienna, Austria, Thursday, May 25, 2017. ()" /></p><p>Back in late May, Saudi Oil Minister Khalid Al-Falih said that 'exports to the U.S. <a href="https://www.bloomberg.com/news/articles/2017-05-26/saudis-take-aim-at-swollen-u-s-oil-stockpiles-in-strategy-shift">will drop measurably</a>,'&nbsp;as the OPEC Kingpin adjusted its focus to reducing exports to the world's most transparent energy hub.</p>
<p>Exports from Saudi to the U.S. take approximately seven weeks to arrive - hence, as we swiftly approach the end of July, we can see from Saudi deliveries this month that they are not just talkin' the talk, but walkin' the walk.</p>
<p>We have <a href="http://blog.clipperdata.com/your-blog-post-title-here-1497352830901">regularly been</a> assessing U.S. imports from Saudi Arabia here on the blog, given that production cuts should be reflecting <a href="http://www.prnewswire.com/news-releases/clipperdata-responds-to-saudi-oil-minister-khalid-al-falihs-statement-on-finding-credible-export-data-to-backstop-new-opec-export-claims-300494925.html">through into lower flows</a>. Imports in January reached nearly a three-year high, as the leading exporter from OPEC ramped up crude exports at the end of last year ahead of the January production cut.</p>
<p>Imports remained strong through May, averaging over 1.2 million barrels per day for the first five months of the year. June imports then slipped, falling to their lowest since last November, before July imports have dropped even further. With just a few days left of the month, Saudi imports to the U.S. are down to their lowest since February 2015:</p>
<p><img src="http://static4.businessinsider.com/image/597f35b4b50ab19f238b491a-702/smith2807a.jpg" alt="Smith2807A" data-mce-source="oilprice.com" /></p>
<p>Saudi's change in tactics makes logical sense. The U.S. is not only the leading consumer of crude in the world, but has the most timely, transparent and reliable data available. As EIA data has been increasingly scrutinized for signs of a tightening global market, the lack of large crude inventory draws in June caused oil prices to drop to the lows for the year.</p>
<p>As oil makes a quick recovery, two billionaires have joined forces to take advantage of the incredibly cheap deals in the market. This is a rare opportunity for regular investors to invest right alongside these two tycoons in a new venture.</p>
<p>However, a combination of slowing waterborne imports, ongoing strong refinery runs, and robust crude exports have now ushered crude inventories to drop to their lowest level since January. Inventory draws to the products as well amid robust exports (a recurring theme, me thinks) and stronger summer demand means total oil and product inventories have moved to a year-over-year deficit, for the first time since mid-2014:</p>
<p><img src="http://static3.businessinsider.com/image/597f3825b50ab162018b4bd7-659/smith2807b.jpg" alt="Smith2807B" data-mce-source="OilPrice.com" /></p>
<p>We discussed Venezuela earlier in the week, and how possible sanctions could impact U.S. crude imports. It has been suggested that U.S. refiners are dialing back on Venezuelan crude to pare their exposure to potential supply losses.</p>
<p>While Venezuelan deliveries to the U.S. were extremely low last month, this was likely due to both timing, and a scramble for cash, as opposed to lower loadings from the troubled nation.<span></span></p>
<p>While China is a leading destination for Venezuelan crude, given Venezuela's need to make oil-for-debt payments to service its $50 billion debt, the Latin American nation is also sending crude to India to raise cash. Funds are also replenished by sending barrels to the U.S., hence last month's blip in deliveries is being followed by a rebound.</p>
<p><img src="http://static1.businessinsider.com/image/597f38c14528e622008b5af1-610/smith2807c.jpg" alt="Smith2807C" data-mce-source="oilPrice.com" /></p><p><strong>SEE ALSO:&nbsp;<a href="http://www.businessinsider.com/next-oil-price-war-saudi-arabia-versus-russia-2017-4" >The next oil price war will be Saudi Arabia vs. Russia</a></strong></p>
<p><a href="http://www.businessinsider.com/oil-prices-saudi-arabia-opec-production-cuts-2017-7#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/asia-earth-ice-melted-rising-ocean-coastline-china-india-2015-3">Animated map shows what would happen to Asia if all the Earth's ice melted</a></p> http://www.businessinsider.com/oil-price-opec-meeting-july-2017-7Oil falls after a report sees OPEC still flooding the markethttp://www.businessinsider.com/oil-price-opec-meeting-july-2017-7
Fri, 21 Jul 2017 08:18:41 -0400Karolin Schaps
<p><span><img style="float:right;" src="http://static5.businessinsider.com/image/5971ef48552be55f008b5aae-747/screen shot 2017-07-21 at 81004 am.png" alt="Screen Shot 2017 07 21 at 8.10.04 AM" data-mce-source="Markets Insider" data-link="http://markets.businessinsider.com/commodities/oil-price?type=WTI" />LONDON (Reuters) -&nbsp;Oil&nbsp;</span>prices fell on Friday after a consultancy report forecast a rise in OPEC production for July despite the group's pledge to curb output, reigniting concerns the market will stay awash with crude.</p>
<p>Petro-Logistics, which tracks OPEC supply forecasts, said OPEC crude production would rise by 145,000 barrels per day (bpd) this month, taking the group's combined output above 33 million bpd.</p>
<p>Higher supply from Saudi Arabia, the United Arab Emirates (UAE) and Nigeria would drive this month's gains, it said.</p>
<p>The news weighed on<span>&nbsp;oil&nbsp;</span>prices which had been trading in positive territory for most of the session.</p>
<p>Benchmark Brent crude futures were down 36 cents at $48.94 a barrel at 1106 GMT, while U.S. West Texas Intermediate (WTI) crude futures traded at $46.52 a barrel, down 40 cents.</p>
<p>OPEC and some non-OPEC states, such as Russia, pledged to cut production by 1.8 million bpd between January this year and the end of March 2018.</p>
<p>The UAE minister, whose country's<span>&nbsp;oil&nbsp;</span>output has been rising, said on Friday he was committed to the cut and said he hoped the deal would have a significant impact in the third and fourth quarters.</p>
<p><span>Oil&nbsp;</span>traders are looking ahead to Monday's meeting of several ministers from OPEC and non-OPEC members in Russia to see if it would address rising production from Nigeria and Libya, which have been exempted from the cuts.</p>
<p>Kuwaiti<span>&nbsp;Oil&nbsp;</span>Minister Essam al-Marzouq, whose country heads the joint ministerial committee which meets in St. Petersburg, said attendees would discuss steps for continuing implementation of the production cut agreement.</p>
<p>The committee, known as the JMMC, can make recommendations to OPEC and other producers to adjust the deal, if necessary.</p>
<p>Some analysts doubted the meeting would lead to any new intervention.</p>
<p>"I don't really think the meeting will result in further output cuts. And Libya and Nigeria won't bee too enthusiastic to cap their production," said Frank Schallenberger, head of commodity research at LBBW.</p>
<p>Nigeria and Libya, both OPEC states, are exempted from the supply curbs deal and have been lifting output.</p>
<p>Schallenberger said he expected Brent prices to remain below $50 a barrel for the remainder of the month.</p>
<p>Analysts at Jefferies said "actions from the next OPEC/non-OPEC working committee meeting seem unlikely".</p>
<p><span>(Additional reporting by Fergus Jensen in Singapore; Editing by Alexander Smith and Edmund Blair)</span></p><p><strong>SEE ALSO:&nbsp;<a href="http://www.businessinsider.com/us-home-sales-volume-canadians-surges-2017-7" >Canada's housing market is rolling over — and buyers are flocking to America</a></strong></p>
<p><a href="http://www.businessinsider.com/oil-price-opec-meeting-july-2017-7#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/garbage-can-trash-911-memorial-nyc-tokyo-london-2016-8">Why you won't find a garbage can near the 9/11 memorial</a></p> http://www.businessinsider.com/the-opec-deal-to-cut-oil-production-might-be-in-trouble-2017-7The OPEC deal to cut oil production might be in troublehttp://www.businessinsider.com/the-opec-deal-to-cut-oil-production-might-be-in-trouble-2017-7
Wed, 19 Jul 2017 22:04:00 -0400Gregory Brew
<p><img style="float:right;" src="http://static4.businessinsider.com/image/59664866abc1c8fb2b8b47b7-800/oil-climbs-on-weaker-dollar-but-rise-in-us-drilling-drags-2017-6.jpg" alt="An oil rig drilling a well at sunrise, owned by Parsley Energy Inc. near Midland, Texas, U.S., May 3, 2017. Picture taken May 3, 2017. REUTERS/Ernest Scheyder " data-mce-source="Thomson Reuters" data-mce-caption="An oil rig drilling a well at sunrise near Midland, Texas" /></p><p>Late on Monday the oil world was shocked to learn that Ecuador planned on exceeding its OPEC production quota, publicly breaking from the supply cuts agreed to in November 2016 and extended in May 2017.</p>
<p>As Bloomberg<span>&nbsp;</span><a href="https://www.bloomberg.com/news/articles/2017-07-18/ecuador-plans-higher-oil-output-missing-opec-cut-commitment">reported</a>, Ecuador announced it wouldn&rsquo;t attempt to cut production by 26,000 bpd, citing its need for greater revenue. Under the terms of the OPEC deal, Ecuador was to keep production to 522,000 bpd.</p>
<p>The public defection has raised the possibility of a more general split within OPEC, between those willing to continue the cuts and those who feel keeping production down is no longer worth the effort. It&rsquo;s possible that Ecuador&rsquo;s move could be followed by other OPEC members. The group&rsquo;s solidarity could shatter, potentially upsetting the recent lift in prices, which have increased from the mid-$40s to nearly $50.</p>
<p>When the OPEC production cuts were announced, speculation began among market watchers regarding the rate of compliance (i.e. how much cheating there would be), and the question of who would break first. Several countries, including Iran, Nigeria and Libya were essentially exempt from cuts: each country argued it was recovering production due to sanctions/internal instability.</p>
<p>For months, OPEC compliance was at 100 percent, thanks largely to Saudi Arabia cutting more than was necessary. But in June that rate<span>&nbsp;</span><a href="http://www.zerohedge.com/news/2017-07-17/opec-deal-splinters-ecuador-will-no-longer-comply-production-quota-due-difficult-eco">slipped</a><span>&nbsp;</span>to 92 percent, as the group pumped more and Riyadh stopped shouldering so much of the burden.</p>
<p>Iraq, historically OPEC&rsquo;s biggest cheater and second-largest producer, could look for reasons to pump more. The country&rsquo;s government recently won a major victory in its battle against the Islamic State, re-taking the city of Mosul in mid-July, and has plans to rebuild amidst the wreckage left by three years of war.</p>
<p>Baghdad is also gearing up for an<span>&nbsp;</span><a href="http://www.huffingtonpost.com/entry/who-controls-the-oil-as-kurdish-independence-looms_us_594a80fbe4b0c24d29f47907">independence referendum</a><span>&nbsp;</span>in the northern autonomous region of Kurdistan, which is oil-rich; the Kurdish independent government has disputed the division of the country&rsquo;s oil revenues and is using the independence referendum to put pressure on Baghdad for a more equitable split of the profits.</p>
<p>Iran, OPEC&rsquo;s third-largest member, announced plans last week to boost production beyond the OPEC production cut limit in March 2018, when cuts are set to expire. While Iran was allowed to produce more under the plan, it promised to cap its production near 3.9 million bpd.</p>
<p>The country has largely stuck to that figure but is eager to pump more, particularly after signing a deal with Total SA, its first major international contract since international sanctions were dropped in January 2016.</p>
<p>In its<span>&nbsp;</span><a href="http://oilprice.com/Energy/Oil-Prices/Oil-Market-Rebalancing-Hasnt-Even-Started-Yet.html">monthly market report</a>, the IEA reported that OPEC compliance had dipped due to increased output from Libya and Nigeria, which are both exempt from cuts. Earlier this year the return of Libyan production, kept down for years due the country&rsquo;s internal instability, together with US shale essentially nullified the effects of the OPEC production cuts, sending prices tumbling in February.</p>
<p>Libya is currently at a<span>&nbsp;</span><a href="http://oilprice.com/Latest-Energy-News/World-News/Libyas-Oil-Production-Close-To-1-Million-Bpd-Highest-In-4-Years.html">four-year high</a>, with output nearing 1 million bpd.</p>
<p>If OPEC members start to see individual countries breaking away from the planned cuts, solidarity among the group could fracture.</p>
<p>Then again, Ecuador is OPEC&rsquo;s third-smallest producer and its decision affects a minuscule amount of the group&rsquo;s production. The country&rsquo;s oil minister has argued that there is an<span>&nbsp;</span><a href="http://www.reuters.com/article/us-global-oil-idUSKBN1A202Z">&ldquo;unwritten agreement&rdquo;</a><span>&nbsp;</span>in OPEC regarding Ecuador&rsquo;s flexibility, and cites the country&rsquo;s economic needs and the growing deficit for its inability to meet the OPEC quota.</p>
<p>The news made<span>&nbsp;</span><a href="http://www.iii.co.uk/alliance-news/1500380197012637900-3/crude-oil-jumps-near-usd47-despite-ecuador-surprise">barely a ripple</a><span>&nbsp;</span>in markets, which opened high Tuesday morning and saw WTI nearing $47 and Brent close to $50 on positive demand news. Concerns that Ecuador&rsquo;s break will set off a contagion of cheating among OPEC members had yet to register with traders, who are back in a<span>&nbsp;</span><a href="https://www.bloomberg.com/news/articles/2017-07-16/oil-gets-respite-as-short-sellers-give-summer-optimism-a-chance">bullish mindset</a><span>&nbsp;</span>after a bearish June.</p>
<p>While the IEA figures pointed to lower OPEC compliance, the group also estimated that<span>&nbsp;</span><a href="http://oilprice.com/Energy/Oil-Prices/4-Reasons-Oil-Will-Rally-Back-To-50.html">demand</a><span>&nbsp;</span>would surge faster than expected, expanding by 1.5 million bpd this year. The market was warmed by news that Chinese refinery demand in June, the second-strongest ever recorded, given further significance due to the continual decline in Chinese domestic output.</p>
<p>The mood when the Ecuador announcement was made was bullish, therefore, negating the effect of the country&rsquo;s decision to break with OPEC. It&rsquo;s possible that fundamentals beyond the actions of a single minor OPEC member will encourage OPEC compliance and keep member states in line. However, improving demand estimates could also encourage members like Iran and Iraq to pump more, in the belief that prices will rise no matter what.</p>
<p>Should compliance dip in the wake of the Ecuador decision, the current bullish mood could see-saw back down, along with prices. It&rsquo;ll take some time to measure how OPEC registers the Ecuador decision, with the July 22 meeting of OPEC and non-OPEC states in St. Petersburg taking on<span>&nbsp;</span><a href="https://www.reuters.com/article/us-opec-meeting-libya-idUSKBN1A30SL">fresh significance</a>.</p>
<p>By Gregory Brew for Oilprice.com</p><p><strong>SEE ALSO:&nbsp;<a href="http://www.businessinsider.com/a-2-billion-energy-focused-private-equity-fund-just-collapsed-to-almost-zero-2017-7" >A $2 billion energy-focused private equity fund just collapsed to almost zero</a></strong></p>
<p><a href="http://www.businessinsider.com/the-opec-deal-to-cut-oil-production-might-be-in-trouble-2017-7#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/heres-how-us-could-prevent-nuclear-strike-north-korea-cyber-attack-hacking-2017-4">How the US could prevent a North Korean nuclear strike — according to a former Marine and cyberwarfare expert</a></p> http://www.businessinsider.com/opec-says-further-cuts-off-the-table-2017-7OPEC says more cuts are off the tablehttp://www.businessinsider.com/opec-says-further-cuts-off-the-table-2017-7
Tue, 11 Jul 2017 21:02:00 -0400Irina Slav
<p><span><img style="float:right;" src="http://static4.businessinsider.com/image/5926e016df1bf082008b4a34-800/opec-sec-gen-sees-growing-consensus-on-duration-of-oil-cut-extension-2017-5.jpg" alt="OPEC Secretary General Mohammad Barkindo listens during a news conference after a meeting of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna, Austria, November 30, 2016. REUTERS/Heinz-Peter Bader" data-mce-source="Thomson Reuters" data-mce-caption="OPEC Secretary General Barkindo listens during a news conference after an OPEC meeting in Vienna" />No further oil output cuts are on the agenda for the July meeting of the ministerial committee set up to monitor compliance with the OPEC-non-OPEC deal, the cartel&rsquo;s secretary general Mohammed Barkindo&nbsp;</span><a href="https://www.reuters.com/article/us-oil-opec-barkindo-idUSKBN19U0XW">told</a><span>&nbsp;media at a news conference in Istanbul ahead of the World Petroleum Forum. </span></p>
<p><span>According to Barkindo, any discussion of further cuts would be premature.</span></p>
<p><span>The comments follow an exciting week in terms of OPEC news. First, Russia said it sees no need for deeper cuts. Then, on Friday, Alexander Novak said Moscow is ready to take part in a revision of the deal if necessary, sparking hopes that deeper cuts may indeed be an option to consider.</span></p>
<p><span>The monitoring committee will meet on July 24 in Russia to discuss the progress of the deal. Last Friday, Novak noted that the committee can make any recommendation it wishes to the participants in the agreement. A recommendation, however, does not automatically mean a change in the deal.</span></p>
<p><span>Meanwhile, it seems that OPEC is thinking of putting a ceiling on the crude oil outputs of Libya and Nigeria, as rising production from these two OPEC producers exempt from the cuts is further complicating the cartel&rsquo;s efforts to draw down oversupply and boost oil prices, The Wall Street Journal&nbsp;<a href="https://www.wsj.com/articles/opec-considers-production-caps-for-libya-nigeria-1499427030">reported</a>&nbsp;on Friday, citing OPEC delegates.</span></p>
<p><span>"Nigeria is definitely becoming a worry for us,&rdquo;&nbsp;a delegate to OPEC from a Persian Gulf Arab country&nbsp;<a href="http://www.marketwatch.com/story/opec-mulls-oil-production-caps-for-libya-nigeria-2017-07-07">told</a>&nbsp;The Journal, while OPEC delegates from a few other nations have expressed similar concerns.</span></p>
<p>On Sunday, Bloomberg<span>&nbsp;</span><a href="https://www.bloomberg.com/news/articles/2017-07-09/libya-nigeria-may-be-asked-to-cap-oil-output-soon-kuwait-says">reported</a><span>&nbsp;</span>that Nigeria and Libya have been invited to the committee meeting in Moscow, citing Kuwait&rsquo;s Oil Minister Issam Almarzooq as saying the two exempt OPEC members may be asked to join the production-cutting effort.</p>
<p>&ldquo;If they are able to stabilize their production at current levels, we will ask them to cap as soon as possible. We don&rsquo;t need to wait until the November meeting to do that.&rdquo;</p>
<p><span>OPEC is hard pressed to find a way to make its deal work in the face of growing U.S. production and growing OPEC production, too. Asking Nigeria and Libya to join the cut is one obvious way to go, yet it remains uncertain how willing these two would be to stop expanding their output given their dependence on the commodity.</span></p><p><strong>SEE ALSO:&nbsp;<a href="http://www.businessinsider.com/russian-energy-minister-on-output-cuts-2017-7" >RUSSIAN ENERGY MINSTER: No additional cuts are needed right now</a></strong></p>
<p><a href="http://www.businessinsider.com/opec-says-further-cuts-off-the-table-2017-7#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/heres-how-us-could-prevent-nuclear-strike-north-korea-cyber-attack-hacking-2017-4">How the US could prevent a North Korean nuclear strike — according to a former Marine and cyberwarfare expert</a></p> http://www.businessinsider.com/russian-energy-minister-on-output-cuts-2017-7RUSSIAN ENERGY MINISTER: No additional oil cuts are needed right nowhttp://www.businessinsider.com/russian-energy-minister-on-output-cuts-2017-7
Sat, 08 Jul 2017 13:02:00 -0400Tsvetana Paraskova
<p><span><img style="float:right;" src="http://static1.businessinsider.com/image/595f8ebdd9fccd31008b48f4-2400/rtr3njgm.jpg" alt="Russian Minister for Energy Alexander Novak" data-mce-source="Kacper Pempel/Reuters" data-mce-caption="Russian Minister for Energy Alexander Novak" />While the oil market is increasingly questioning if OPEC/non-OPEC&rsquo;s production cuts have any effect, Russia&rsquo;s Energy Minister Alexander Novak&nbsp;</span><a href="https://uk.reuters.com/article/uk-russia-opec-novak-idUKKBN19R1KL">weighed in</a><span>&nbsp;on Thursday, saying that the production cut pact was working to reduce global oversupply and price volatility, and there was no need to take immediate additional moves to lift the price of oil.</span></p>
<p><span>&ldquo;We believe that it is necessary to move within the framework of the agreed decisions and that new, snap decisions are not necessary,&rdquo; Novak told Reuters in an interview published on Thursday.&nbsp;</span></p>
<p><span>&ldquo;I think that the decisions that were taken, they were the right ones,&rdquo; according to the Russian minister. Any new moves to prop up oil prices would create more &ldquo;chaos&rdquo; in the market, Novak told Reuters.</span></p>
<p>The minister was echoing the words of four Russian government officials who told Bloomberg on Wednesday that Russia<span>&nbsp;</span><a href="http://oilprice.com/Energy/Oil-Prices/Oil-Slides-As-Russia-Speaks-Out-Against-Deeper-Output-Cuts.html">would oppose</a>any attempts to deepen the oil production cuts currently in effect in OPEC and 11 other oil producers. One of the sources said that deepening the cuts would be unwise, giving the impression that OPEC and its partners in the deal are uncertain about its effectiveness in reducing global supplies.</p>
<p><span>While Novak was giving his opinion, he told Reuters &ldquo;I can&rsquo;t predict what the proposals could be from [other] ministers&rdquo; when the Joint OPEC-Non-OPEC Ministerial Monitoring Committee (JMMC) gathers for its next&nbsp;</span><a href="http://www.opec.org/opec_web/en/press_room/4371.htm">meeting</a><span>&nbsp;in St. Petersburg, Russia, on July 24.</span></p>
<p>Some analysts have suggested that oil prices could plunge to<span>&nbsp;</span><a href="http://oilprice.com/Latest-Energy-News/World-News/Analyst-Expect-30-Oil-In-2018-Unless-OPEC-Deepens-Cuts.html">US$30</a><span>&nbsp;</span>a barrel in 2018 and maintain that low price for some two years, should OPEC fail to make steeper output cuts.</p>
<p>Although Iran&rsquo;s Oil Minister Bijan Zanganeh was quoted as saying last month that OPEC producers were holding discussions on potentially<span>&nbsp;</span><a href="http://oilprice.com/Energy/Crude-Oil/Iran-OPEC-Considers-Cutting-Deeper-As-US-Shale-Beats-Forecasts.html">deepening</a>&nbsp;the cuts, OPEC delegates and sources told Reuters last week that the cartel would<span>&nbsp;</span><a href="http://oilprice.com/Energy/Crude-Oil/OPEC-Not-In-A-Hurry-To-Cut-Deeper.html">not be hurrying</a><span>&nbsp;</span>to make steeper cuts.</p>
<p><span>Referring to OPEC&rsquo;s&mdash;and its partners&rsquo;&mdash;exit from the cuts deal after March 2018, Russia&rsquo;s Novak told Reuters today that &ldquo;we are not going - as we discussed with our colleagues - to all hike oil production on April 1 at once.&rdquo; By then inventories would have dropped to their normal levels and oil demand would be picking up in the second quarter next year, according to Novak.&nbsp;</span><br /><br /><span>The Russian minister believes that there is room for oil prices to rise from the current levels, and that the &ldquo;fair&rdquo; value is between US$50 and US$60 per barrel. At 9:07am EDT on Thursday, WTI Crude was trading up 1.51 percent at US$45.81, while Brent Crude was up 1.42 percent at US$48.47.</span></p><p><strong>SEE ALSO:&nbsp;<a href="http://www.businessinsider.com/us-shale-is-wrecking-its-own-recovery-2017-7" >US shale is wrecking its own recovery</a></strong></p>
<p><a href="http://www.businessinsider.com/russian-energy-minister-on-output-cuts-2017-7#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/heres-how-us-could-prevent-nuclear-strike-north-korea-cyber-attack-hacking-2017-4">How the US could prevent a North Korean nuclear strike — according to a former Marine and cyberwarfare expert</a></p> http://www.businessinsider.com/oil-price-july-7-brent-and-wti-falling-on-oversupply-fears-2017-7Oil prices are slidinghttp://www.businessinsider.com/oil-price-july-7-brent-and-wti-falling-on-oversupply-fears-2017-7
Fri, 07 Jul 2017 02:37:50 -0400Oscar Williams-Grut
<p>LONDON &mdash; The price of oil fell&nbsp;1% in early trade on Friday morning, amid fears of oversupply.</p>
<p>UK Brent is down 1.02% to $47.62 a barrel at 7.25 a.m. BST (2.25 a.m. ET):<img src="http://static5.businessinsider.com/image/595f2c4f7ba13620e722f8e7-946/brent.jpg" alt="brent" data-mce-source="Investing.com" /></p>
<p>US West Texas Intermediate oil is down 1.12% to $45.01 at the same time:<img src="http://static4.businessinsider.com/image/595f2c4f7ba13620e722f8e8-945/wti.jpg" alt="wti" data-mce-source="Investing.com" /></p>
<p>David Madden, a market analyst at CMC Markets, says in an email on Friday morning: "Oil initially surged after the energy information agency (EIA) reported a 6.3 million-barrel draw in oil inventories, and traders were anticipating a draw of 2.3 million barrels. The gains were given up after a few hours and oil dropped to a new low of the day yesterday.</p>
<p>"The American Petroleum Institute (API) announced a much bigger than expected drop in inventories on Wednesday &ndash; so the EIA report wasn&rsquo;t a total shock. Even though US stockpiles of oil are at its lowest level since January, the concerns about global over-supply are still doing the rounds."</p><p><a href="http://www.businessinsider.com/oil-price-july-7-brent-and-wti-falling-on-oversupply-fears-2017-7#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/the-bottom-line-bitcoin-bubble-good-reasons-to-believe-tech-is-not-one-2017-9">THE BOTTOM LINE: A lot of talk of a bitcoin bubble and a few good reasons to believe tech isn't one</a></p> http://www.businessinsider.com/only-60-oil-can-save-the-aramco-ipo-2017-6Only $60 oil can save the Aramco IPOhttp://www.businessinsider.com/only-60-oil-can-save-the-aramco-ipo-2017-6
Sun, 02 Jul 2017 13:03:00 -0400Zainab Calcuttawala
<p><img style="float:right;" src="http://static2.businessinsider.com/image/59563f0bd084cca4008b6a50-2400/aramco.jpg" alt="Aramco" data-mce-source="Ali Jarekji/Reuters" data-mce-caption="A worker looks at journalists during a media tour of the Khurais oilfield, about 160 km (99 miles) from Riyadh, on June 23, 2008." /></p><p><span>The OPEC deal is in crisis. All oil price gains derived from the 1.2 million-barrel cut&rsquo;s initial announcement and implementation have been wiped out, and No. 1 OPEC producer Saudi Arabia&rsquo;s attempt to draw down American inventories has fallen flat, due in part to insubordination from the No. 2 producer, Iraq, along with upticks in production from Nigeria, Libya, and&nbsp;</span><a href="https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&amp;s=WCRFPUS2&amp;f=W">U.S. shale</a><span>.</span></p>
<p><span>The KSA had a clear opportunity to drastically change the direction of oil prices last month, when the Organization of Petroleum Exporting Countries (OPEC) met in Vienna to discuss the duration and scope of the output cut extension. Though Riyadh agreed to continue the deal three months longer than analysts expected (the new deal ends in March 2018, as opposed to December 2017 as many expected), the bloc leader did not heed recommendations to deepen the cuts, keeping production at 32.5 million bpd.</span></p>
<p>In addition, Nigeria and Libya got a pass that allows them to produce as much as they can for the next nine months, despite the African duo&rsquo;s booming recovery worth hundreds of thousands of barrels.</p>
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<p>In April and May, Saudi Arabia cut exports despite the fact that the OPEC deal does not limit export volumes. But new<span>&nbsp;</span><a href="http://www.cnbc.com/2017/06/27/saudi-opec-oil-exports-crude.html">ClipperData</a>&nbsp;says that June numbers could reveal a reversal in that downward trend, as KSA appears ready to ship more oil.</p>
<p>The royal family &ndash; especially newly crowned heir to the throne Mohammed bin Salman &ndash;<span>&nbsp;</span><a href="http://www.forexlive.com/news/!/saudi-arabia-targeting-60-oil-for-aramco-ipo-report-20170622">needs</a>&nbsp;oil prices near $60 for Saudi Aramco&rsquo;s 2018 IPO to generate the income it needs. At the time of this article&rsquo;s writing, Brent was trading up at $47.78.</p>
<p>One month after OPEC&rsquo;s failure to toughen production quotas, the bloc remains uncertain about deeper cuts. Reuters reported on Tuesday that the monitoring committee for the deal, plus Saudi Arabia and Russia, would officially discuss the deal&rsquo;s progress next at the end of<span>&nbsp;</span><a href="http://www.reuters.com/article/us-opec-oil-idUSKBN19I1FS">July</a>. That&rsquo;s an extra two months of market standstill.</p>
<p><span>The IPO isn&rsquo;t moving along as quickly as originally planned. Riyadh&rsquo;s financial planners are behind in preparing Aramco and world markets for what is expected to be the largest IPO in history. The team was supposed to reach a decision on a foreign bourse for the listing by the end of Ramadan, but Eid-ul-Fitr passed days ago, and the victor has yet to be named&mdash;just murmurs that Bin Salman is at odds with top planners who prefer London over New York.</span></p>
<p>And while the Saudis may not be deliberately procrastinating on the listing, holding out for higher oil prices, the current low oil prices certainly aren&rsquo;t rushing things along.</p>
<p><span>Realistically, no stock exchange other than New York or London had a fair chance at winning the Aramco listing. The United Kingdom had presented plans to bend its listing rules to accommodate the state oil company on more favorable terms, but British fund managers&nbsp;</span><a href="http://oilprice.com/Latest-Energy-News/World-News/Warnings-Mount-Against-Rule-Bending-For-Aramco-IPO-In-London.html">find</a><span>&nbsp;the obvious kowtowing to Saudi oil wealth to be obscene. New York would connect Riyadh to the steepest pool of international funds, but an&nbsp;</span><a href="http://oilprice.com/Latest-Energy-News/World-News/Warnings-Mount-Against-Rule-Bending-For-Aramco-IPO-In-London.html">ongoing</a><span>&nbsp;class action lawsuit against Saudi Arabia pursuant to the controversial Justice Against State Sponsors of Terrorism Act could expose Aramco and its liquid assets to litigation.</span></p>
<p><span>And there&rsquo;s no doubt that Riyadh desperately needs the liquid. The $100-$400 billion it hopes to raise from the IPO is earmarked for a much-needed economic overhaul, bringing Saudi Arabia into the 21st century&mdash;without the oil dependency&mdash;by 2030. The KSA has the most to lose if investors do not get excited to buy small pieces of 5 percent of its most valuable company.</span></p>
<p><span>With some claiming that peak oil is expected to hit around 2030, Aramco shareholders would have just 12 years to profit from their investment before it loses most of its value&mdash;or even all of its value. And that&rsquo;s assuming the Aramco listing goes live early next year, as promised. Riyadh has yet to pick a venue, and the rest of the planning process has been shrouded in secrecy. Who knows how close they are to finalizing a valuation or determining exactly what assets will be included in the IPO-version of Aramco?<br /></span></p>
<p><span>A wrong decision on any of the above factors could be the straw that breaks the camel&rsquo;s back for investors and hedge fund managers who have taken their most&nbsp;<a href="http://oilprice.com/Energy/Oil-Prices/Gloomy-Outlook-Sees-Hedge-Funds-Turns-Bearish-On-Oil.html">bearish</a>&nbsp;position on oil futures markets since the price crash in 2014. As the world&rsquo;s largest oil exporter, its tick tock on the clock for Saudi Arabia to make a big change in oil market fundamentals, and doing &ldquo;<a href="https://www.reuters.com/article/us-oil-markets-slump-idUSKBN19D1PX">whatever it takes</a>&rdquo; as Saudi Arabia has vowed to do, may be much more important&mdash;and much more painful&mdash;that it had imagined.</span></p><p><strong>SEE ALSO:&nbsp;<a href="http://www.businessinsider.com/30-oil-contagion-energy-markets-2017-6" >$30 oil could spark contagion in energy markets</a></strong></p>
<p><a href="http://www.businessinsider.com/only-60-oil-can-save-the-aramco-ipo-2017-6#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/apple-ios11-iphone-software-features-tips-tricks-power-user-video-2017-9">The 5 best hidden features from the latest iPhone update</a></p> http://www.businessinsider.com/oil-price-june-22-oil-below-45-2017-6Oil prices are on track for worst first half performance since 1997http://www.businessinsider.com/oil-price-june-22-oil-below-45-2017-6
Thu, 22 Jun 2017 02:36:58 -0400Oscar Williams-Grut
<p>LONDON &mdash; Oil&nbsp;is hovering below $45 and on track for its worst performance for the first-half of a year since 1997.</p>
<p>Oil prices&nbsp;dropped&nbsp;in late trade on Wednesday and have failed to recover, amid continued concerns about oversupply. It&nbsp;<a href="http://uk.businessinsider.com/oil-price-june-20-2017-6">entered bear market territory earlier in the week</a> and price pessimism appears to be setting in. Traders are increasingly skeptical that OPEC will be able to control prices through supply caps in the way it once could.</p>
<p>Michael Hewson, chief market analyst at CMC Markets, says in an email: "The declines seen in the past few weeks really shouldn&rsquo;t have been too much of a surprise to OPEC given the capacity of US shale producers to vacate the space left open for them.</p>
<p>"That, and a significant increase in output from Libya and Nigeria, both of whom are exempt from the quota system, and it is clear that OPEC underestimated their own importance, when it came to global oil output. The decline in prices hasn&rsquo;t been helped by concerns that demand might be slowing in Asia, meaning the prospect that inventory levels are likely to remain elevated for longer."</p>
<p><a href="http://markets.businessinsider.com/commodities/oil-price?type=WTI">US West Texas Intermediate</a> is&nbsp;hovering close to 12-month lows, down 0.02% to $42.52 at 7.10 a.m. BST (2.10 a.m. ET):</p>
<p><img src="http://static1.businessinsider.com/image/594b65b4e92b941da15cd7a8-716/crude.jpg" alt="crude" data-mce-source="Markets Insider" data-link="http://markets.businessinsider.com/commodities/oil-price?type=WTI" /><a href="http://markets.businessinsider.com/commodities/oil-price"></a></p>
<p><a href="http://markets.businessinsider.com/commodities/oil-price">Brent oil</a>, meanwhile, is below $45 a barrel for the first time this year. Brent is down 0.09% to $44.74 at 7.15 a.m. BST (2.15 a.m. ET):</p>
<p><img src="http://static5.businessinsider.com/image/594b65b4e92b941da15cd7a9-715/brent.jpg" alt="brent" data-mce-source="Markets Insider" /></p>
<p>Oil prices have now dropped by more than 20% since the start of the year and, with eight days left to go until the first half of 2017 ends, the Telegraph reports that oil is <a href="http://www.telegraph.co.uk/business/2017/06/21/ftse-100-extends-losses-oil-price-slump-rattles-investors-pound/">on track for its worth first-half performance since 1997.</a></p>
<p>CMC Markets' Hewson warns that price pressure could continue, saying: "A new unknown is whether the new Saudi leadership will alter course on its current oil policy, given that it is they who are making the lion&rsquo;s share of the cuts in output."</p>
<p>The Saudi king this week shook up the kingdom's&nbsp;line of succession, <a href="http://uk.businessinsider.com/saudi-king-mohammed-bin-salman-mbs-son-crown-prince-2017-6">putting his 31-year-old son first in line to the throne.</a></p>
<p>Hewson adds: "Another question now is what US shale producer&rsquo;s pain threshold is as oil prices close in on the $40 level, and levels last seen in August last year."</p>
<p>OPEC began pumping out oil in 2014 as a tactic to try and put the US shale industry out of business by depressing prices to unsustainable levels. It had a dramatic effect, <a href="http://uk.businessinsider.com/baker-hughes-rig-count-july-2-2015-7?r=US&amp;IR=T">reducing the number of US oil rigs from just over 1,600 to around 500</a>.</p><p><a href="http://www.businessinsider.com/oil-price-june-22-oil-below-45-2017-6#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/the-bottom-line-bitcoin-bubble-good-reasons-to-believe-tech-is-not-one-2017-9">THE BOTTOM LINE: A lot of talk of a bitcoin bubble and a few good reasons to believe tech isn't one</a></p>